Shoe Zone shares sink in perfect storm of rising costs and falling sales

Shoe Zone shares sank on Tuesday after the retailer issued an update on its financial outlook, citing ongoing difficulties in the global shipping industry and unexpected weather patterns affecting sales.

The footwear retailer has been grappling with increased container prices, a consequence of reduced shipping vessel supply and the continued rerouting of cargo away from the Suez Canal.

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In addition to increased costs, Shoe Zone sales fell from April to June creating a perfect storm for lower profits. The company now expects profit before tax for the year to be not less than £10m.

Shoe Zone shares were 14.75% down at the time of writing.

“Budget footwear firm Shoe Zone left investors with cold feet after its latest profit warning. Perhaps the most significant takeaway from the downbeat guidance was the flagged increase in shipping costs, with upward pressure on container prices thanks to the reroute away from the Red Sea and the Suez Canal,” said Russ Mould, investment director at AJ Bell.

“Shoe Zone’s warning also dragged down LED lighting specialist Luceco, another big importer of product from overseas.

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“It is a reminder that inflationary pressures remain in the global economic system which may have wider implications than tripping up Shoe Zone. It also means investors will be closely monitoring companies with global supply chains to see if they are experiencing a similar impact.

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